British Columbia Insurance Blog

Insurance companies and their lawyers tend to evaluate the value of claims better than plaintiffs' counsel.

mthomas@harpergrey.com (Michael Thomas) — Mon, 17 Nov 2008 11:54:10 -0800

Eighty to 92 percent of all cases settle before trial. A recent study by Kiser, “… An Empirical Study of Decision Making in Unsuccessful Settlement Negotiations”, Journal of Empirical Legal Studies, Volume 5, Issue 3, 551‑591, September 2008, compares settlement offers to trial results in 2,054 cases that went to trial from 2002 to 2005 in the United States. The study indicates that plaintiff go to trial more often than they should, and that defence counsel, generally are better at evalauting claims than plaintiffs. However, when the defendants make an error in evaluating a claim, they tend to be signficant.

A party is defined as erring in going to trial if the settlement offer that the other side made was greater than the amount awarded at the trial. In 61 percent of the cases that went to trial the plaintiffs erred in going to trial by receiving less than what the defendants offered prior to trial. In 24 percent of the cases the defendants erred in going to trial, as the plaintiffs received more than what they offered to settle the case prior to trial. In 15 percent of the cases, both sides made the right decision by going to trial; the plaintiff received more than the defendant offered prior to trial, but the defendant paid less than what the plaintiff demanded before trial.

When the plaintiffs make the wrong decision, on average it cost them about $43,000, that is, the award on average was $43,000 less than what they expected. Plaintiff decision‑making is particularly poor in medical malpractice cases where the decision error for plaintiffs was 81 percent. Parties were better off in going to trial only 4.1 percent of the time in medical malpractice cases. With respect to other personal injury cases, both parties were better off going to trial 20.5 percent of the time, the defendant was better off going to trial 53.2 percent of the time, and the plaintiff was better off going to trial 26.3 percent of the time. Although the defendants made a wrong decision less often, when they were wrong, they paid out on average $1.1 million more than their offer for a wrong decision.

Kiser also looked at the effect of forum on the plaintiff and defendant errors in going to trial. Jury trials had a significant impact on a plaintiff’s ability to correctly predict whether to proceed to trial. Sixty‑four percent of plaintiffs rejected a settlement offer to their detriment in jury trials, whereas defendants only made an error in proceeding to trial by jury 22 percent of the time. Bench trials did not significantly alter either party’s ability to predict outcome. Interestingly, counsel experience also did not play a factor in a party’s ability to properly elect to settle or proceed to trial.

A plaintiff who suffers damage due to impecuniosity cannot recover the loss.

mthomas@harpergrey.com (Michael Thomas) — Sat, 15 Nov 2008 11:17:00 -0800

Damage that results from a plaintiff's own impecuniosity are not recoverable at law.

Roopam Fashions v. Greenwood General Insurance Agency Inc. 2008 BCPC 254 British Columbia Provincial Court D.G. Sanderson J.P August 8, 2008

The Claimant operated a clothing store that had three laminated glass windows broken by vandals. The Claimant had insurance coverage which provided a “glass contract” with a local glass contractor. in the event of breakage. The original glass contractor had gone out of business, and a second, Broco Auto Glass and Upholstery Ltd. (“Broco”) had assumed the obligations under the glass contracts.

The Claimant sued the broker who sold the insurance policy and the glass contractor for replacement of the laminated glass. In the meantime, the Claimant had replaced the windows at its own expense with non-laminated glass, because it could not afford laminated glass. Broco argued that it was not obliged to replace laminated glass because laminated glass was excluded by the glass contract. However, Broco was unable to point to any language in the contract excluding laminated glass. The court held that the Claimant was entitled to recover the cost to install laminated glass at its store. The Claimant was not entitled to recover the expense the Claimant incurred to install non-laminated glass, because “if a person’s own impecuniosity is the cause of the damage, then that damage is not recoverable

Past settlements must be deducted from tort awards

mthomas@harpergrey.com (Michael Thomas) — Thu, 13 Nov 2008 11:42:17 -0800

The recent British Columbia Court of Appeal decision of Ashcroft v. Dhaliwal 2008 BCCA 352 September 16, 2008, clarifies that past settlements will be deducted from judgements. The settlement has to be to compensate the plaintiff for a tortious act, and the injury must be related to the injury sustained at trial.

Ms. Ashcroft was involved in two motor vehicle accidents and was awarded $400,000 for her injuries at trial. The first accident was very serious, and Ms. Ashcroft had not yet recovered from the first accident at the time that the second motor vehicle accident occurred. The second accident was not as serious, but aggravated and exacerbated the injuries sustained in the first accident. Because the second accident was relatively minor, Ms. Ashcroft settled with that tortfeasor prior to the trial. The trial judge directed that the net proceeds from the settlement of the second accident be deducted from his award to ensure that Ms. Ashcroft would not be overcompensated for her loss. The trial judge did not know the amount of the second settlement. In addition, the trial judge determined that if he were wrong in deducting the settlement funds, he would follow the percentage method of apportionment initially set out in Pryor v. Bains (1986), 69 B.C.L.R. 395 (C.A.) and apportion 70 percent of the total loss to the first tort motor vehicle accident and 30 percent to the second.

After the decision, it was revealed that Ms. Ashcroft had recovered $315,000 from the second tortfeasor, which was significantly more than the 30 percent that the trial judge attributed to the fault of the second tortfeasor. On appeal, Ms. Ashcroft argued that the court should ignore settlement proceedings in the circumstances to encourage the settlement of claims. When Ms. Ashcroft settled with the second tortfeasor, they estimated the amount remaining to be recovered from the first tortfeasor. By settling with the second tortfeasor, Ms. Ashcroft took the risk of undercompensation, that the trial judge would make a less favourable award against the first tortfeasor than the settling parties had anticipated. In addition, Ms. Ashcroft also took a risk of settling for too little against the second tortfeasor. The British Columbia Court of Appeal noted that the converse of this risk is that a trial judge can make a more favourable award against the first tortfeasor than the settling parties had anticipated, and thus Ms. Ashcroft would be overcompensated for her loss. Ms. Ashcroft argued that, in order to encourage settlement, she must be entitled to profit from overcompensation in order to offset the risk of undercompensation if settlement is to be encouraged in multiple tortfeasor situations. The British Columbia Court of Appeal disagreed with this argument and noted that it would be wrong to promote settlement by encouraging parties to seek out double recovery in breach of the fundamental privilege of damages. The British Columbia Court of Appeal noted that this was consistent with their decisions in Dos Santos v. Sun Life Insurance Company of Canada, 2005 BCCA 4, Dixon v. British Columbia (1980), 24 B.C.L.R. 382 (B.C.C.A.), and Bryanston v. Finance Limited and DeVries, [1975] Q.B. 703 (C.A.).

The result of Ashcroft is that injuries suffered by a person from a tortious act could be taken into account, and result in a reduced award many years after a settlement has occurred. In certain circumstances this could place the risk of being undercompensated in a settlement solely on the plaintiff’s shoulders, and bar the plaintiff from receiving the reciprocal benefit of being overcompensated by the settlement.

The ramifications of Ashcroft are that a plaintiff’s counsel should be careful in agreeing to a settlement in a situation where their client has been injured by more than one tortfeasor. If your client settles with one tortfeasor, the second tortfeasor may reap the benefit of that settlement, whereas your client may pay the cost of underestimating the impact of the other accident on her injuries.

Insurance counsel should be sure to inquire and insist on full disclosure of all past settlements and claims to ensure that they will be deducted from current claims.

An insurer who intends to exclude coverage on the basis of arson must be able to prove arson with clear and cogent evidence.

mthomas@harpergrey.com (Michael Thomas) — Mon, 10 Nov 2008 11:13:15 -0800

An insurer who intends to exclude coverage for fire liability on the basis that the fire was intentionally set must be able to prove the elements of arson with clear and cogent evidence.

Lancer Enterprises Ltd. v. Saskatchewan Government Insurance (c.o.b. SGI Canada) 2008 SKQB 346 Saskatchewan Court of Queen’s Bench J.D. Koch J. September 4, 2008

The Plaintiff claimed for fire insurance coverage and consequential damages including damages for non-payment by the insurer. The action pertained to a fire at a gas station owned by the Plaintiff. The Defendant denied coverage on the basis that the station manager had deliberately set the fire. In order to support its denial of coverage, the Defendant was required to prove the following elements of arson, each on a balance of probabilities:

“(1) that the fire was incendiary, that is deliberately set, not the result of natural or accidental causes;

(2) that whoever is alleged to have deliberately set the fire had the opportunity to do so; it is not essential that the opportunity of the alleged perpetrator be exclusive;

(3) that there was motive on the part of the insured, or someone on behalf of the insured, to cause the fire.”

The court held that the Defendant had established, through clear and cogent evidence, the three elements of arson on a balance of probabilities. The court found that the fire did not occur naturally, that the station manager had the only opportunity to set the fire, and that the insured’s precarious financial position provided the appropriate motive to start the fire and make a fraudulent insurance claim. Therefore, the claim was dismissed.

An insured has an ongoing obligation to advise his insurer of relevant information upon the renewal of the policy.

mthomas@harpergrey.com (Michael Thomas) — Wed, 05 Nov 2008 11:09:18 -0800

A renewed insurance policy is a new policy for the purpose of determining the policy’s inception date. An insured has an obligation to advise his insurer of relevant information upon the inception or renewal of the policy.

South Stormont (Township) v. Frank Cowan Co. [2008] O.J. No. 3594 Ontario Superior Court of Justice J. Mackinnon J. January 14, 2008

In January, 1998, the Township of Osnabruck and the Township of Cornwall were amalgamated into the Township of South Stormont, the Plaintiff in this action. At the time of the amalgamation, the Plaintiff arranged insurance coverage which included coverage for environmental liability, but which excluded coverage for environmental liabilities that were known to the insured when the policy came into effect. The Plaintiff made a claim under the insurance policy for an environmental liability regarding contaminated well water which was known to the Township of Osnabruck prior to the amalgamation. The insurer denied coverage on the basis that the insured was aware of the potential liability prior to the policy coming into effect. The Plaintiff took the position that since it came into existence at the same time as the policy took effect, it could not have any prior knowledge of the liability of the former Township of Osnabruck.

The court held that notwithstanding the fact that the policy originally came into effect on the date of amalgamation, it had been renewed twice in the interim, with additional coverages purchased. The effect of renewing the policy was to renew its inception date. The Plaintiff made no effort to report the environmental liability to the insurer at the time of the renewals, despite having clear and cogent knowledge of the potential for liability, and in violation of the policy’s reporting conditions. The court held that the policy came into effect at the date of renewal, and that therefore the Plaintiff had prior knowledge of the environmental liability, so its coverage was excluded. The court further held that even if the policy came into effect on the date of amalgamation, the court would have found that the Plaintiff had prior knowledge of the environmental liability on the basis that the amalgamated township inherited the rights and obligations of its predecessor entities.

This case was originally summarized by jhavelaar@harpergrey.com and originally edited by dpilley@harpergrey.com

The determination of whether an insured is a member of a household is heaveily influenced by financial dependency.

mthomas@harpergrey.com (Michael Thomas) — Mon, 03 Nov 2008 11:05:04 -0800

An arbitrator's decision holding that an injured victim in an automobile accident should receive statutory benefits from his stepfather's insurer was upheld on the basis that the victim was principally dependent upon the stepfather for financial support.

Gore Mutual Insurance Company v. Co-Operators General Insurance Company [2008] O.J. No. 3603 Ontario Superior Court of Justice P.M. Perell J. September 18, 2008

The Appellant, Gore Mutual Insurance Co., appealed an arbitrator’s decision made pursuant to the Statutory Accident Benefits Schedule, O. Reg. 403/96, s. 2(1), of the Insurance Act, R.S.O. 1990, c. I.8. The arbitrator held that the appellant was liable to pay statutory accident benefits to Joseph Morgan. Morgan was catastrophically injured while a passenger in his stepfather’s vehicle, which was insured by the Appellant when that vehicle was struck by a vehicle insured by the Respondent, Co-Operators General Insurance Co. The key factor in placing liability on the Appellant was the finding of fact that Morgan was principally dependent upon his stepfather for financial support. The Appellant challenged that finding on the basis that Morgan was employed at the time of the accident.

Justice Perrell upheld the arbitrator’s finding that Morgan had been principally dependent upon his stepfather for financial support, agreeing with the arbitrator’s conclusion that, while employed at the time of the accident, Morgan’s employment earnings did not contribute 50% of his share of household expenses, and that Morgan’s demonstrated earning capacity over the nine months preceding the accident was such that he was unable to provide for himself without the financial assistance of his stepfather

This case was origianlly summarized by jhavelaar@harpergrey.com and originally edited by dpilley@harpergrey.com

An exclusion clause in an insurance policy is only valid if it is unambiguous.

mthomas@harpergrey.com (Michael Thomas) — Fri, 31 Oct 2008 10:58:15 -0800

An ambiguous term in a critical illness policy exclusion clause should be construed against the party who drafted the clause.

Duke v. Clarica Life Insurance Co. 2008 ABCA 301 Alberta Court of Appeal C.M. Conrad and P.W.L. Martin JJ.A. and A.G. Park J. (ad hoc) September 16, 2008

The Appellant insurance company had issued a critical illness policy to the Respondent. When the Respondent developed Parkinson's disease, the Appellant denied coverage, relying on an exclusion clause which stated: "if the insured person had a covered critical illness or any symptoms associated with a covered critical illness before the date the Policy came into effect". The Appellant argued that although the Respondent was unaware of having Parkinson's disease and had not had a diagnosis of the disease at the time the policy came into effect, the progressive nature of Parkinson's disease meant that the Respondent had symptoms of the disease at the time the policy came into effect, thus triggering the exclusion clause.

At trial the court held that the exclusion clause was ambiguous and should be interpreted, contra preferentem, against the insurance company. On appeal the court upheld this interpretation and concluded that the Respondent was entitled to receive critical illness benefits. Martin, J.A., writing for the unanimous court, held, at para. 19, that:

“The appellant submits that the clause was intended to exclude coverage to those individuals already suffering from a listed critical illness. That may be so, but the chosen words do not make that intention clear and the policy specifically uses the phrase “associated with”. Indeed, the intent of the clause would be more clear if those words had not been used at all.”

The Appellant further argued that the Respondent should not be entitled to critical illness benefits because the symptoms of his illness were not sufficiently disabling. The Court of Appeal dismissed this argument, holding at para. 27 that: “Herculean efforts by an insured to avoid the assistance of attendants for reasons of pride or privacy should not disentitle him to the benefit he contracted for.”

An exclusion in an insurance policy may not be valid if it is unclear.

mthomas@harpergrey.com (Michael Thomas) — Fri, 31 Oct 2008 10:58:15 -0800

An ambiguous term in a critical illness policy exclusion clause should be construed against the party who drafted the clause.

Duke v. Clarica Life Insurance Co. 2008 ABCA 301 Alberta Court of Appeal C.M. Conrad and P.W.L. Martin JJ.A. and A.G. Park J. (ad hoc) September 16, 2008

This case was originally summarized by jhavelaar@harpergrey.com and originally edited by dpilley@harpergrey.com

The Automobile Injury Compensation Commission may not be able to reconsider a decision to pay accident benefits.

mthomas@harpergrey.com (Michael Thomas) — Tue, 28 Oct 2008 10:52:44 -0800

The Court of Appeal upheld the Automobile Injury Compensation Appeal Commission's (the "Commission") decision holding that the Provincial Motor Vehicle Insurer was not entitled to terminate the Insured's income replacement benefits. Since the Commission had previously determined that the insured was entitled to insurance benefits, the Commission could not reconsider the decision several years later.

Shier v. Manitoba Public Insurance Co. [2008] M.J. No. 305 Manitoba Court of Appeal M.A. Monnin, B.M. Hamilton and R.J.F. Chartier JJ.A. September 8, 2008

The Insured had been receiving income replacement indemnity ("IRI") benefits since 1996 as a result of injuries she suffered in a 1994 car accident. In 2006, a senior case manager with the Provincial Motor Vehicle Insurer reconsidered the 1996 decision after reviewing information that the Insurer received in 2000 from the Insured's Canada Pension Plan ("CPP") disability benefit file. The case manager determined that the Insured had not been capable of holding employment at the time of the accident in light of a pre-existing disability and that she therefore did not qualify for income replacement benefits in accordance with the section 105 of the Manitoba Public Insurance Act (the "Act"). This section provides that a victim who is regularly incapable, before the accident, of holding employment for any reason except age is not entitled to an income replacement indemnity or a retirement income.

The Commission allowed the Insured's appeal from the case manager's decision and ordered the Insurer to reinstate her IRI benefits from the date of their termination. The Commission's ruling was based on four separate grounds. First, that there was no new information upon which the decision to terminate benefits had been made. Second, that the Insurer had not exercised due diligence in obtaining the new information and, as a result, could not rely on this information to decide the Insured's entitlement to benefits. Third, the Insurer’s reconsideration of the 1996 decision was untimely because the Insurer had only 60 days from the date of the case manager's decision to correct an error pursuant to Section 171(2) of the Act. Fourth, the case manager for the Provincial Motor Vehicle Insurer had correctly considered section 105 in deciding the Insured's entitlement to benefits in 1996.

The Insurer was granted leave to appeal the Commission's decision on two questions of law, these being whether the Commission had erred in its interpretation of Section 171(2) of the Act or whether the Commission erred when it found that the principles set out in Palmer et al. v. The Queen, [1980] 1 S.C.R 759 apply to a Section 171(1) consideration of new information.

The Manitoba Court of Appeal noted that the Commission's finding that there had been no error by the case manager in 1996 was sufficient on its own to resolve the dispute and that the appeal based on the approved questions of law was therefore moot. The Court of Appeal nonetheless went on to exercise its discretion and address the issues raised by the approved questions.

On the first issue of law, the Court of Appeal found for the Insurer, finding that the Commission had erred in its intepretation of section 171(2) by reading in a 60-day time limit on the Insurer for correction of errors made by a case manager. The Court of Appeal held that section 171(2) should be read to give the Insurer the authority to correct errors in certain circumstances provided that the decision being reconsidered is not the subject of review or appeal, as the words of that section clearly state. On the second issue of law, the Court of Appeal found for the Commission and found that it had not erred in applying the principles for "fresh evidence" from R. v. Palmer, this being that the information must be relevant and decisive to the issue and the claimant must not be prejudiced by a lack of due diligence on the part of the Insurer in bringing the information forward, to the section 171(1) consideration. The Court of Appeal noted that the Palmer principles offer logical and reasonable considerations when exercising discretion under section 171(1) to make a fresh decision because of new information, whether that exercise of discretion is by the Insurer in the first instance, or by the Commission on hearing of an appeal.

This case was originally summarized by sdavies@harpergrey.com and originally edited by dpilley@harpergrey.com

A disability insurer cannot set off damages with a right of subrogration. A reimbursement clause may be necessary.

mthomas@harpergrey.com (Michael Thomas) — Mon, 27 Oct 2008 10:42:14 -0800

Successful appeal by the Insurer from a decision confirming the Insured's entitlement to past and future disability benefits under a group insurance policy.

This case was summarized in the Lawyers Weekly.

Wilson v. Great-West Life Assurance Co. [2008] N.B.J. No. 303 New Brunswick Court of Appeal J.E. Drapeau C.J.N.B., W.S. Turnbull and A. Deschenes JJ.A. July 31, 2008

The Insured was injured in a highway accident and began receiving monthly disability benefits under a policy issued to her employer. The Insured obtained judgment against the driver of the motorcycle on which she was riding at the time of the accident, including an award of damages for past and future loss of income. The Insured repaid all the disability benefits she had received under the disability policy, but contested the Insurer’s entitlement to any part of the award for future loss of income on the basis that the Insurer had no rights of subrogation under the policy after the entry of the judgment. The Insurer eventually ceased paying disability benefits to the Insured, giving rise to her application for judicial confirmation of her entitlement to past and future disability benefits. The Application Judge found that the Insurer had breached the policy in stopping payment of disability benefits to the Insured.

The only issue before the Court of Appeal was whether the policy was a contract of indemnity. If it was a contract of indemnity, the parties agreed that the appeal must be allowed and the Insured's application for benefits dismissed. The Insured argued that the policy was not a contract of indemnity because it only provided partial indemnity for any loss of income (60% of her basic monthly rate of earnings) and also that a policy identical to the one at issue in this case was found to be a non-indemnity contract in Mutual Life Assurance Co. v. Tucker(1993), 119 N.S.R. (2s) 417 (C.A.), [1993] N.S.J. No. 56 (QL).

The Court of Appeal considered the distinction between non-indemnity and indemnity policies, noting that if the policy is one of indemnity, equity steps in and vests in the Insurer a right of subrogation, which in insurance cases is regulated by the broad underlying principle of securing full indemnity for the Insured on the one hand, and, on the other, of holding him accountable as trustee for any advantage he may obtain over and above compensation for his loss. The Court of Appeal found that the Application Judge had erred in stating that "a policy providing LTD benefits is [not] an indemnity policy" and that the correct view is that a policy providing LTD benefits may be a contract of indemnity, depending on its terms. The Court of Appeal reviewed case authorities which indicate that long-term disability insurance policies are presumptively ones of indemnity, unless the terms of the policy conclusively indicate a contrary intention. The Court of Appeal commented that there was nothing in the terms of the policy in question to displace this presumption and conclusively establish an intention to create a non-indemnity contract.

The upshot of the provisions in the Insurer's policy was that it did not provide coverage unless the employee was both totally disabled, from a medical standpoint, and without employment income. If the disability benefits were payable under the policy, the basic amount would be calculated as a fraction at the Insured employee's rate of earnings and then reduced by specific income benefits. Therefore, what the policy provided was, at a minimum, partial indemnity for the employee's disability-related loss of income and the Court concluded that it therefore met the essential requirements of a contract of indemnity.

The Court of Appeal allowed the Insurer’s appeal and set aside the decision of the Application Judge's finding that the group disability policy was not a contract of indemnity. The Insured was thefore not entitled to continue receiving disability benefits from the Insurer.

This case was originally summarized by sdavies@harpergrey.com and originally edited by dpilley@harpergrey.com

To obtain summary judgement one must show that there are no facts in dispute and the claim has no chance of success.

mthomas@harpergrey.com (Michael Thomas) — Sat, 25 Oct 2008 10:46:46 -0800

Unsuccessful application by two Insureds for summary judgment, partial summary judgment or an order limiting the Plaintiff's damages to losses not covered by a builder's all-risk policy that had been issued to the Plaintiff. The court determined that the Plaintiff had satisfied the onus of establishing that the claim had a real chance of success.

Sable Offshore Energy Inc. v. Ameron International Corp. [2008] N.S.J. No. 356 Nova Scotia Supreme Court S.M. Hood J. August 27, 2008

A paint applicator (AML) and a structural steel fabricator and erector (RKO) applied for summary judgment or alternative remedies in litigation commenced by the Plaintiff for damages arising from paint failures at a project involving on and off shore facilities for the production of natural gas. The Plaintiff alleged that there had been "widespread and premature failure" of the paint used on the facilities. The Plaintiff had purchased a Builder's All-Risk insurance policy from the Insurer in respect of the project.

RKO sought summary judgment dismissing the Plaintiff's claim, or, alternatively, an order that the Plaintiff defend it in the action on the basis that RKO was covered by the Builder's All-Risk policy in accordance with the terms of its contracts. AML also sought summary judgment dismissing the Plaintiff's claim against it, or, alternatively, an order limiting damages to the loss not covered by the Builder's All-Risk policy.

The Court stated that the appropriate test to be applied on a motion for summary judgment was that the applicants must satisfy the Court that no material facts are in dispute, after which the Court can consider whether summary judgment should be granted. The respondent then has the onus of showing that its claim has a "real chance of success". The Court found that there were no issues of material fact in dispute and that the issues of what coverage was to be provided under the Builder's All-Risk policy and the intent of the parties with respect to insurance and indemnity could be resolved by looking at the contract wording. These issues, the Court noted, were questions of law and not questions of fact. Accordingly the Court was entitled to consider whether summary judgment should be granted and the onus shifted to the Plaintiff to show that its claim had a reasonable chance of success.

With respect to RKO's application for summary judgment, the Court considered the two contracts between RKO and the Plaintiff, one for steel erection and one for steel fabrication. The Court held that only the steel erection contract contained insurance provisions for the benefit of RKO and that the insurance and indemnification provisions in that contract did not bar a claim against the Plaintiff. RKO's application for summary judgment was therefore dismissed.

With respect to AML's application for summary judgment, the Court considered the provisions in the contract between AML and the Plaintiff and the provisions in the Builder's All-Risk policy and found that there was no provision in the contract barring the Plaintiff from claiming against AML for breach of its representations, warranties and guarantees. The Court further held that if the Plaintiff could establish that it had suffered loss and damage as a result of AML's defective wormanship, there was a "real chance of success" given that the Builder's All-Risk insurance excluded coverage for defective workmanship on the part of the Insured.

In the result, the Court dismissed both RKO and AML's applications with costs to the Plaintiff.

This case was originally summarized by sdavies@harpergrey.com and originally edited by dpilley@harpergrey.com

An insured cannot sue for claims arising from a motor vehicle accident that have been arbitrated.

mthomas@harpergrey.com (Michael Thomas) — Thu, 23 Oct 2008 10:13:57 -0800

The Insurer was successful, in part, on its motion for summary judgment to have portions of the Insured's claim against it dismissed. When accident benefit arising under a motor vehicle policy had been aribtrated all aspects of the claim subject to the arbitration are a nullity. In this case only the claims for bad faith and attendant care were not subject to earlier arbitration and could be maintained in a civil action.

Champaigne v. Co-Operators [2008] O.J. No. 3400 Ontario Superior Court of Justice R.D. Gordon J. August 11, 2008

The Insured was involved in a motor vehicle accident on August 22, 2002 and subsequently submitted a claim for accident benefits to the Insurer. Two unsuccessful mediations were held in respect of the Insured's claim for accident benefits, after which he initiated arbitration proceedings. The Insured appealed the arbitrator's decision, and, before receiving a ruling on the appeal, he commenced this action against the Insurer claiming damages for loss of accident benefits, damages for breach of contract, negligence, misrepresentation, breach of fiduciary duty and allegations, which can generally be described as "bad faith" claims.

The Insurer argued that the Insured's claims were res judicata given that he had already adjudicated his claims through arbitration proceedings, which were available to him under the Ontario Insurance Act. The Insurer's second argument was that certain claims made by the Insured were prohibited because they had not proceeded through mediation, as required by the Insurance Act. In particular, the Insured had not mediated his claim for attendant care benefits. The Insured, on the other hand, took the position that because the "bad faith" claims had not been the subject of arbitration proceedings and since his Statement of Claim asked for "damages for the loss of accident benefits", these claims were distinct from the claims that had been considered by the arbitrator.

The Court considered the factors, which must exist for a finding of res judicata to apply, these being that the same question or issue has been decided, that the decision was judicial and final, and that the parties to the judicial decision or their privies are the same persons as the parties to the proceedings in which res judicata is raised. The Court found that the second and third elements had been satisfied and that the only issue to be decided was whether the issues that the Insured was seeking to have litigated had been decided during the arbitration proceeding. The Court concluded that the claims being made by the Insured in the present action for damages for loss of accident benefits were all considered and determined by the arbitrator, with the exception of his claim for attendant care benefits. As the Insured had not engaged in mediation of this part of his claim, as required by Section 281(2) of the Insurance Act, the claim was a nullity and could not be brought against the Insurer.

With regard to the Insured's claim against the Insurer for bad faith, the Court found that the arbitrator had not specifically considered or made any findings on the allegations of bad faith advanced by the Insured, with the exception of his determination relative to the special damages. Accordingly, the Court concluded that the arbitrator's decision did not decide the same issue as presented in the Insured's "bad faith" claim in these proceedings and res judicata did not apply to this part of the Insured's claim.

This case was originally summarized by sdavies@harpergrey.com and originally edited by dpilley@harpergrey.com

Injuries incurred during a robbery involving a motor vehicle are covered by the motor vehicle policy.

mthomas@harpergrey.com (Michael Thomas) — Wed, 22 Oct 2008 10:08:44 -0800

The Court found that a motor vehicle used in commission of a robbery falls under use or operation of a motor vehicle when a pedestrian victim is dragged by the shoulder strap of her purse suffering personal injuries after a passenger in a passing van reaches out of the window and grabs it.

Hannah v. John Doe [2008] B.C.J. No. 1580 Supreme Court of British Columbia A.F. Cullen, J. August 20, 2008

The Insurance Corporation of British Columbia ("ICBC") brought an application for summary judgment dismissing the Plaintiff's claim against ICBC, which was brought pursuant to British Columbia's "Hit and Run" legislation.

The Plaintiff had been shopping and was returning her shopping cart to the stall when a van drove past her. As it did so, the passenger reached out of the window grabbed her purse strap and, as the van accelerated away, the Plaintiff was pulled backwards and hit her head on the pavement. The van did not run into or bump her. The Plaintiff was dragged a short distance before the purse ripped.

ICBC's main argument was that the injuries to the Plaintiff did not arise out of the use or operation of a motor vehicle as those terms are used in the relevant legislation and case law.

The court reviewed the law in some detail. Particular attention was paid to the reasons of the Supreme Court of Canada in the joint cases of Citadel General Assurance Co. v. Vytlingam, 2007 SCC 46 and Lumberman's Mutual Casualty Co. v. Herbison, 2007 SCC 47. The court found that the act of dropping rocks from an overpass was severable from the use or operation of the motor vehicle, even though the motor vehicle had been used to transport the rocks to the overpass. Similarly, in Lumberman's, the tort feasor had used his vehicle to travel to hunting grounds, and en route, stopped the vehicle, got out and shot what he thought was a deer, but turned out to be another hunter. The Supreme Court of Canada found that the act of shooting the hunter was severable from the act of driving to the location where the hunter was shot.

The court distinguished these decisions and found that in the present case, the motor vehicle was used as a motor vehicle, notwithstanding that it was used in the commission of the offence of robbery and the civil tort of assault. The court found that unlike in Citadel and Lumberman's, the act causing the alleged injury to the Plaintiff was directly caused, and not isolated from, or severed from the use of a vehicle as a vehicle. In this case, the evidence was that the passenger in the vehicle grabbed the Plaintiff's purse, which she was carrying on her shoulder, the driver accelerated the vehicle, and it was that acceleration in combination with the passenger's grip on the Plaintiff's purse that caused her to fall to the ground and to be dragged by the vehicle as it accelerated away. The court found that there was a clear causal link between the use of a motor vehicle as a motor vehicle and the injuries alleged by the Plaintiff.

This case was originally summarized by celder@harpergrey.com and originally edited by dpilley@harpergrey.com